Multi-state cannabis operator MedMen said its current financial conditions raise doubts to whether the company can continue on.
According to an SEC filing, as of December 24, 2022, MedMen had cash and cash equivalents of $15.6 million and working capital deficit of $137.4 million. The company said it incurred net losses from continuing operations of $15.1 million for the six months ended December 24, 2022, compared to $8.2 million during the same period of 2021.
"The conditions described above raise substantial doubt with respect to the company’s ability to meet its obligations for at least one year from the issuance of these Condensed Consolidated Financial Statements, and therefore, to continue as a going concern," Medmen wrote. "The company plans to continue to fund its operations through the implementation and expansion of its cost savings plan, and various strategic actions..."
MedMen said its annual operating plan for fiscal year 2023 estimates it will be able to manage its ongoing operations, but warned its cash needs are significant and not achievable with the current cash flow from operations.
The company plans to reduce its projected cash requirements by delaying new store development, permanently or temporarily closing stores that are deemed to be performing below expectations, and/or implementing other restructuring activities.
In August 2022, MedMen completed the sale of its operations in the state of Florida at the final sales price of $67 million which comprised of $63 million in cash and $4 million in liabilities. The buyer made a cash payment of $40 million at closing, $11.5 million on September 15, 2023, and is required to make an additional installment payment of $11.5 million on or before March 15, 2023.